by John G. Merna
Halloween is about scary things we know are not real but enjoy being scared anyway. Bankruptcy is similarly scary because of the myths and urban legends about the process. Here are five “tricks” (myths) about bankruptcy that will help you better understand the powerful help bankruptcy can provide to a financially struggling soul.
Bankruptcy ruins your credit. Wrong. The effect on your credit score from filing a bankruptcy varies but is only a drop of a limited number of points. Most people over look that their credit is already ruined and that is why they are considering bankruptcy.
Bankruptcy makes your credit score drop to zero. Wrong. Not true as stated above, the reporting of the Chapter 7 or Chapter 13 filing has a limited effect on your credit score. If your credit score is in the 500’s or lower then you have horrible credit and bankruptcy will help your score improve quickly.
Bankruptcy hurts your credit for 10 years. Wrong. The reporting can stay on your credit report for 10 years in the case of a Chapter 7 and seven years in the case of a Chapter 13, but that is not the same as how long it affects your credit. Your score is your credit and you can rebuilt your score to qualify to purchase a house within 3 years after bankruptcy.
I will have to give up my car and house if I file bankruptcy. Wrong. A good attorney can save both for you and get you a bankruptcy discharge. Spent you time finding an experienced attorney not a cheap attorney. It will make all the difference in ways you won’t appreciate until later.
I will lose my security clearance if I file. Wrong. Bankruptcy is a federal right and recognized as a legal and valid solution when a clearance holder or clearance applicant fall on financial times. You debt is eliminated so you are not longer a security risk in that you might sell secrets to get money to pay your debt. This assumes no other lifestyle issues are in play.
Stay tuned for tomorrows blog on “Five Little Known Treats (Realities) About How Bankruptcy Can Help You”. Thanks for reading.